Question

Ratchet Manufacturing anticipates total sales for August, September, and October of $200,000, $210,000, and $220,500 respectively. Cash sales are normally 25% of total sales and the remaining sales are on credit. All credit sales are collected in the first month after the sale. Compute the amount of accounts receivable to be reported on the company's budgeted balance sheet for August.

Answer 1

Answer:

$150,000

Explanation:

Given data:

Total sales for the month of August = $200,000

Total sales for the month of September = $210,000

Total sales for the month of October = $220,500

Total cash sales = 25% of the total sales

Thus,

The total credit sales = Total sales - Total cash sales = 100% - 25% = 75%

Therefore,

For the month of the August,

Total cash sales = 25% of total sales of August = 0.25 × $200,000

or

Total cash sales = $50,000

Therefore, total credit sales for the month of August

= Total sales in August - Total cash sales in August = $200,000 - $50,000

= $150,000

Hence,

the amount of accounts receivable to be reported for August = $150,000